Kenya Tea Audit Cannot Explain Sh5.18bn in Bonus Borrowing
A Tea Board of Kenya audit found factories managed by the Kenya Tea Development Agency borrowed Sh30.47 billion to help fund the 2024/25 farmer bonus, Sh5.18 billion more than their own calculated requirement, and could not establish why.
Factories managed by the Kenya Tea Development Agency borrowed Sh5.18 billion (about US$40 million) more than their own calculated requirement for the 2024/25 farmer bonus, a state audit found.
The Tea Board of Kenya, the statutory regulator for the industry, examined commodity loans that KTDA Management Services arranged for 55 factories in the six months to December 2025 to help finance the payment. The borrowing came to Sh30.47 billion (about US$234 million) against a requirement of Sh25.29 billion (about US$195 million), and the audit could not establish why the difference was taken, the Daily Nation reported. Conversions here are approximate, at about Sh130 to the dollar.
That requirement was not the bonus alone. It covered the second payment, September green-leaf payments, and the settlement of balances the factories owed one another.
The money arrived in four tranches: Sh20.02 billion from KCB, Sh5.17 billion from Co-operative Bank, Sh3.99 billion from a Stanbic facility and Sh1.29 billion from Bank of Baroda. Twenty-nine factories borrowed more than they required for the second payment, 27 of them in the western block, west of the Rift Valley.
The second payment, commonly called the bonus, is the annual sum paid to smallholders on top of the rate they receive for green leaf through the year. It was declared at Sh28.53 billion (about US$219 million) for 2024/25, and factories funded it from the commodity loans together with their own tea-sale earnings.
The audit also revised an earlier account of what one set of loans paid for. Commodity loans of Sh12.8 billion (about US$98 million) that it examined "were used to finance operations and not to pay bonuses released in October 2024, as earlier indicated," the audit said, Business Daily Africa reported on Dec. 8.
The bonus-related borrowing is part of a larger debt total. At June 2025 the regulator put borrowing across KTDA's 71 factories at Sh26.06 billion (roughly US$200 million), spread across several loan types. Inter-factory loans accounted for Sh10.36 billion (about US$80 million), arranged at KTDA head office with no board resolutions approving them and no governing policy. Asset-based financing came to Sh2.59 billion, and the audit found equipment supplied to the Kambaa and Sanganyi factories cost significantly more than comparable units delivered elsewhere. Three factories, Kebirigo, Ragati and Chinga, borrowed Sh300.17 million meant for capital projects and spent it on other items instead.
The debt is not evenly spread. Factories west of the Rift Valley held Sh21.61 billion (about US$166 million) of the June total, against Sh4.45 billion (about US$34 million) east of the Rift. In the nine months to September 2025, West Rift tea averaged Sh226.17 per kilogram (about US$1.74), down 16.3% year on year, while East Rift tea averaged Sh379.96 (about US$2.92), down 2%.
A later loan schedule reported by the Daily Nation put the same debt, re-measured at Dec. 31, 2025, at Sh34.05 billion (roughly US$262 million) across the 69 factories it covered: Sh30.36 billion in commodity loans, Sh2.67 billion in asset-based financing and Sh1.01 billion in term or project loans.
KTDA rejected the suggestion that the debt reflects mismanagement. It said unsold stock reached 104 million kilograms (about 115,000 US tons) in 2024 against 37 million kilograms in 2021, and that the Sh12.8 billion facility was bridging finance cleared by the end of September 2025.
"The farmer can't wait for five months for the tea to be sold to pay them. That is why bridging commodity funding is important," KTDA said.
The Ministry of Agriculture and Livestock Development ordered the audit on Oct. 26, 2025, through Principal Secretary Paul Ronoh, after farmers raised concerns about reduced bonus payments. KTDA is owned by about 600,000 smallholder growers through their factory companies, and its factories process roughly 60% of Kenya's tea.
The regulator recommended that the second payment "follow what the tea business actually earned," not what a factory can borrow. KTDA has since moved to phase out inter-factory lending in favour of commercial bank borrowing, Pulse Kenya reported.
Sources: Pulse Kenya, KTDA's tea bonus problem: Billions in borrowing leaves factories in debt; Business Daily Africa, KTDA factory debts rise to Sh26bn on fiscal blunders; Business Daily Africa, KTDA blames unsold tea stocks for Sh26bn debt spree; Daily Nation, How KTDA factories borrowed billions to pay tea farmers bonuses and left them carrying the debt; Capital Business, Govt orders audit of loans taken by KTDA-managed tea factories.